Dynare forums

I started using Matlab and Dynare a few days ago and I've been trying to use it to find out things about my model.

My intention is to see the effect of a shock in the steady state of the model in order to see if the model will reach a new steady state.

I get the steady state but then an error:

STEADY-STATE RESULTS:

l 34.5403
a 0.700686
yc 3.33333
y 115.134

STEADY-STATE RESULTS:

l 34.5403
a 0.700686
yc 3.33333
y 115.134
??? Error using ==> print_info at 40
Blanchard Kahn conditions are not
satisfied: no stable equilibrium

Error in ==> stoch_simul at 81
print_info(info,
options_.noprint);

Error in ==> model1 at 124
info = stoch_simul(var_list_);

Error in ==> dynare at 120
evalin('base',fname) ;

First of all I am wondering if I apply the shock at the correct time. Secondly, if the error can be interpreted as the nonexistence of another steady state, once the system is shocked out of the first one. And finally, if anyone knows of a good way to possibly plot this result, it would answer all of my dilemmas.

Cheers!

Without knowing the model it is hard to tell. The error here tells you that your linearized model once shocked out of steady state will diverge to plus/minus infinity due to the non-existence of a saddle path. It will not converge back to the same steady state.